Rothermere: can ‘easily’ fund deal Desmond: has vital lines of credit
Amid speculation that Hollinger International will be broken up and sold off (in addition to The Daily and Sunday Telegraph and The Spectator, it also owns the Jerusalem Post and the Chicago Sun-Times), the battle among UK publishers for the Telegraph newspapers begins to look like a race in which two bitter rivals are likely to make the running.
One is Richard Desmond’s Express Newspapers. He already owns half of West Ferry Printers, where the Telegraph titles are printed, and has an option to buy out the plant if the Telegraph Group should change hands.
Desmond is also understood to have the necessary lines of credit to buy the Telegraph Group which is valued at up to £600m.
Desmond’s arch enemy, Associated Newspapers, also has a serious interest and would “easily” be able to fund the deal, insiders suggest, despite speculation that it already owes too much money elsewhere.
“Current debt levels are certainly no barrier to an Associated bid,” said one.
Neither would Desmond’s half-ownership of Westferry be considered a poisoned pill. The Express boss is too much of a businessman to pull the plug on a profit-making contract, even if it did end up in Associated hands – and even if he did, there is sufficient print capacity available elsewhere.
Gannett, north America’s largest publishing house and owner of UK regional giant Newsquest, has also been suggested as a bidder – possibly for the Hollinger titles on both sides of the Atlantic.
Press Holdings, the Barclay brothers’ company that owns The Scotsman, should not be ruled out, having figured unsuccessfully in recent bidding wars for the Express titles and, last year, SMG Publications.
Any of these offers would be subject to a Competition Commission inquiry.
If the deal happens after 29 December, Ofcom, the new media regulator, would be asked to test the plurality or public interest of any new ownership.
There will also have been non-trade bidders among the rush of interested parties making inquiries to Lazard, the investment bank handling the potential sale – among them, possibly, former Carlton chief executive Michael Green and American financier Nelson “Snapple” Peltz.
A “data room” will be made available in the next few days for bidders to examine Hollinger’s books and assets.
Last year, the Telegraph Group reported a 31 per cent increase in pretax profits to £39.7m, even though sales fell from £327.6m to £310.2m.
SECRET PAYMENTS THAT TOPPLED BLACK
Conrad Black, as he then was, took over the Telegraph Group in 1985 from the Berry family, paying £30m for just over half the shares. Since then he has controlled the Telegraph titles through a network of companies headed by Ravelston, a private company 67 per cent owned by Black, which also has Telegraph Group chief executive Dan Colson on the board.
Ravelston owns 78 per cent of Hollinger Inc, a Toronto-based holding company which in turn owns 30 per cent of the ordinary shares and 73 per cent of the voting shares of Hollinger International.
Institutional shareholder Tweedy Browne owns 18 per cent of US-based Hollinger International and has led the opposition to Black’s tenure. It called for the internal investigation which this week revealed that Black and other executives received £19m in payments without the board’s knowledge.
A further £44m in already declared “non-compete” fees has also been paid to Black and other members of the Hollinger board by companies to which Hollinger has sold titles. These fees guarantee that Black won’t launch rival publications but are normally paid to a company rather than individuals on the board.
THE KEY FIGURES
$7.2m (£4.2m): fee paid both to Black and to president David Radler after sale of Hollinger newspapers.
$16.6m (£9.7m): paid to a Black-owned subsidiary and not disclosed to the Hollinger board.
$1.2m (£0.7m): undisclosed payments to two other Hollinger board members.
$202m (£119m): further fees under investigation said to have been paid to Black and other Hollinger executives.
£400-£500m: value of Telegraph Group newspapers.
$8m (£4.7m): amount of Hollinger money Black used to buy documents of FD Roosevelt for a biography he has just written.
$50m (£29m): sum Black made after shares rose following the scandal.
$2.3m (£1.35m): last year’s bill for Black’s corporate jet.
By Ian Reeves